Proposal of issuing RMB 500 yuan bills

| March 13th, 2010

From Netease:

China Net March 11 reports, the largest denomination of RMB is too small, 100 yuan notes can no longer meet the rapid growth of economy. CPPCC national Committee member, Chairman of the Board at Hong Kong Yu Zhen Holding Group Co. Ltd. Chen Zhendong (陈振东) submitted a proposal at the CPPCC National Committee yesterday that the time for issuing 500 yuan RMB notes has come.

20100312-500yuan-01

The rumor of 500 yuan design which has been on the Internet since 2007

Currently, the largest denomination of China’s yuan is too small; one hundred yuan has been issued for 23 years which is difficult to adapt to the economic development needs.

“Cash denominations are too small for the significant increasing cash transactions in the society, which is a waste of time for the financial institution and the people.” Chen Zhendong used bank Automatic Teller Machine (ATM) as an example. “The machine cash box normally holds hundreds of the largest denomination of the notes, during a normal business day on average there are 50 to 60 withdrawals, and an ATM can only supply money for half of a day. If the bank ATM needs to be refilled twice a day, it potentially increases human and material resources.”

He said issuing 500 yuan large note not only can save time on the socioeconomic operation, but also can reduce the production costs on printing currency.

Chen Zhendong made clear that the size of the denomination in currency is not necessarily connected with inflation. According to China’s economic growth, residences’ income, cost of living and to compare with developed counties’ large denomination bank notes, China can first issue RMB 500 yuan face value notes, then issue 1,000 yuan face value notes accordingly.

“When launching the 500 yuan large denomination notes, the volume can be properly controlled, first start with the southeast coastal areas then circulate into the whole country.” Chen Zhendong said.

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 20100312-500yuan-03

The current largest bill: 100 Yuan

Netizen’s comments on Netease:

网易广西玉林网友 ip:218.21.*.*: 2010-03-12 18:39:14 发表

Wa, one month only getting two pieces of paper, getting one counterfeit means working a month for nothing, the other one is for living cost.

网易河南郑州网友 ip:202.196.*.*: 2010-03-12 18:14:17 发表

Really stupid, anybody can be a member of the national Committee?

网易中国网友 ip:218.207.*.*: 2010-03-12 18:38:19 发表

The beginning of the inflation, no matter how you say it, it won’t do any good.

网易湖北十堰网友 ip:119.101.*.*: 2010-03-12 16:00:48 发表

I think we should issue 250 yuan face value notes. If I take couple of 500 yuan bills to go out, I would be robbed! How can he think of such thing? If human lives are not guaranteed, then there are no environmental issues. It reminded me of T. V. Soong era  driving a car with a bag of money in order to buy a box of matches, if we go with what he proposed, later we need a truck of money to buy an ox. This pig is really awesome…

网易火星网友 ip:unknown: 2010-03-12 18:57:42 发表

Inflation starts exactly like this, when large bills are issued, smaller face valued bills will slowly become worthless ~ absolutely oppose the issuing!

网易河南郑州网友 ip:123.15.*.*: 2010-03-12 18:41:09 发表

This guy said saving cost, it is really saving labor costs, but China has so many people, do not need to save, more saving means unemployment! Typical capitalists proposal.
Members always propose these stupid suggestions, but the real issues no one dares to mention, no one is willing to mention.

网易美国网友 ip:192.9.*.*: 2010-03-12 18:52:32 发表

Really there is no need, people use credit cards more now days.

网易北京网友 [haoke]:  2010-03-12 21:18:53 发表

Firmly opposed the 500 yuan large note for the following reasons: first, fear of robbery, with large valued bills it is easier to lead to life-threatening situations; second is not convenient for people getting their wages, many people can only receive two 500 yuan bills a month; third is putting large valued money at home is unsafe, once it is stolen, lost is too much; fourth is inconvenient for the public servants at all levels when consuming them, it is too much trouble for the ladies (Xiao Jie) to give them changes.

25 Comments | Leave a comment | Comment feed

  1. Samuel says:

    wait how will this mean you lose more when you get robbed? i believe when these larger bills are put into use, the smaller bills (like the current 100) will still be in use. if you’re carrying 1000, regardless of whether it’s 10x 100s or 2x 500s, you’ll still lose 1000 if you get robbed. doesn’t make sense

    • GuoBao says:

      Logic isn’t Chinese peoples strongest trait. Not trying to bash anyone,, it just isn’t.

      • james says:

        Agreed, but just to save some face for china, I understand what he is talking about. Unlike western countries, a LOT of people carry a LOT of cash with them, with 100 notes, you can only limit to say….20,000 or 30,000…even 50,000. MAX fitting into one of those Man Purse clutches they love so much. Now that number just increased 5 folds……catch my drift??

        • Samuel says:

          has anyone seen 天下无贼 (A World Without Thieves)? The farm boy was transporting his life’s savings via train and because the largest bill is 100, it filled up a manila envelope (it was obvious what was inside). If they had larger bills like 500 or perhaps 1000, it would be so much easier to hide and instead actually harder for thieves to find.

          • Wang Er says:

            I have seen the movie. However, it’s a movie after all. The farm boy 傻根, extremely naive but blessedly honest, didn’t send his 60k RMB saving from working in Tibet to his home in Hebei because the fee is “expensive”. However, as I just checked, the actual fee for transferring money in 2006 (the movie was produced in 2004/5) was from 0.1% to 50 RMB maximum, thus he wouldn’t pay more than 60RMB to transfer 60K. In reality, few people would take the risk for only few couple of RMB like 傻根 did, and the reason of his money was stolen was mainly because he was telling everyone in the train how happy he is for having saved 60K and carrying it home like a hero!

            It’s a great movie though. The unrealistic but unbelievably honest and forgiving boy touched many people’s hearts. And the actor 王宝强 became a superstar in China after this movie.

            • kevin says:

              Hi,
              I found 110,553 in Chinese yuan. The $1000.00 bills are 1944 and the one dollars bills are 1944 but the $500 dollar bill is unmarked. It says 500 on one side (brown with blue color on other side and 500 in lower left and right corners with and 500 in a cloud symbol

          • Key says:

            Yep I saw that movie in 2006 as well and loved it.

      • Fotticinesine says:

        I already hate when I have to go to a Chinese toilet and I have only a 100 RMB note left to clean my ass …

    • Wang Er says:

      I’m pretty sure the commenter is playing joke on it. Read the whole Chinese comment, “我拿几张500元的上街,不会被抢吧!亏他想出来,命都会没了,就更环保了,不会吃喝拉撒的污染环境” ( … if [my] life was lost in robbery, that would be more environmental friendly, [since] I wouldn’t eat/drink/poop/piss to pollute the environment). The Chinese one is witty to read and I think it’s not hard to get the sense of mockery from the English translation too. Some one seriously needs to get a trait of humor I guess 🙂

  2. Carl says:

    should just make the largest bill 10 dollars then. that way, you’ve to to be either carrying gold bars or bags of cash, both are easily detectable and when illegal, easily comprehended.

    haha

    but really, why don’t we just cut values of everything by a factor of ten? wouldn’t that be even easier?

    plus, i don’t think the article mentioned this: there are still a very large wealth gap between the rich and poor in China. They say that issuing 1000$ bill a possiblity. Now can you imagine a life when you can almost never be able to hold ten of your countries largest value bill in your hands for an entire lifetime? wow. (i think there are bad wording in my sentences, but it’s getting late, so bear with me)

    On the other hand, moderate inflation is neither a good nor bad thing, it’s a natural process of a market economy. As long as government control on wages and absurd prices are present, moderate inflation is not even mentioned as a problem.

    Now back to the bill thing, ummm… not nessesary, as there are other ways to solve this problem

  3. Pytisma says:

    @Samuel: you’re so right… they’re acting as if it would mean, you can’t use any small bills anymore….

  4. LaoshiSuan says:

    I make an average foreign teacher wage in China and I hate getting handed a huge stack of bills worth about $13 US each. It doesn’t fit in my pocket, which means I have to put my salary in my handbag where it is much more likely to be stolen by a pickpocket or purse-snatcher. I would very much prefer to get part of my salary in 500s and I know many Chinese (in education, IT, accounting, etc type jobs, earning 4000-8000 a month) who feel the same.

    When I’m at the bank and I see people walk out with huge plastic bags of cash it seems they are just advertising to thieves. A 500 bill would be useful now, but I suspect in 10 years it will be like the $100 in the US – rarely used because people use credit and debit cards.

  5. Eason says:

    This is a good idea. A country which needs this waaaay more than China though is Korea. Koreans earn on average much more money, not to mention things are more expensive, but the largest bill is 10,000 krw (~10 usd normally)

    • Fiddy says:

      I think you may be mistaken. When I was in Korea last month the ATMs were giving out 100,000 and 500,000 krw notes.

      • Fiddy says:

        oops I meant 50,000 and 100,000 won notes. Maybe this is a new thing but they were quite useful and I am hardly a rich man.

  6. GuoBao says:

    It’s long overdue tbh. Wonder what the (few) remaining hardcore communists would say to Deng being on the highest note and Mao on the second highest. It kinda reflects modern China very well.

  7. Wang Er says:

    I believe the demand of a bank note with higher face value depends on where you live. My hometown is a third-tier city and when buying relatively expensive stuffs like furniture and branded cloths, most people use debit cards or credit cards since it’s more convenient (and safer), while when buying food or grocery in restaurants or super markets one or two 100 yuan notes are enough. It could be different story in large cities like Beijing or Shanghai, but bank cards are more prevailing there.

    Sure there are proposals from CPPCC and some other government consultants in the past few years, but at least a 500 yuan bank note is not on the People’s Bank of China’s (the central bank that controls monetary policies) timetable. They refuted the rumor of a new 500 yuan note last year. Read the news here:

    http://www.techweb.com.cn/news/2009-07-04/414859.shtml

  8. GuoBao says:

    The argument of the devastating effect of getting a fake 500 seems a bit odd to me since the most of the times when you’ll (possibly) receive one is when you get paid or when you make a withdrawal from a bank. First of all I think we can rule out that a bank would hand out fake 500s and secondly the vast majority of businesses and companies when paying wages get them from banks as well so unless your boss deliberately is trying to cheat you it shouldn’t be a problem. Anyway if you get 2 or 3 500 bills you should be able to see if they are good or not. I think it would be a good idea to implement a higher note. It seems strange if China wants to be one of the top 3 economies that it’s highest note should only be the 100.

    • I think usually fakes seem to crop up when accepting change from a cabbie, and once I got a fake 20 from a KFC. Probably not dealing in 500s in either situation.

      That said, people will definitely try to print fakes and get away with it. Better have some state-of-the-art proofing technology that allows the picture of Deng Xiaoping to actually bite you hand when you handle him.

  9. captain Jack says:

    Good idea, looks good to. Nice to see something without Mao’s face, Deng deserves(relative to other Chinese leaders) to be on the 500.

  10. Gary says:

    China definitely needs a larger denomination bill OR a more up to date payments system – I hated carrying around a stack of 100 RMB notes in Beijing but only the large international chain stores like Carrefour and WalMart accept charge cards. For everything else, including rent, cash is needed. To pay 7000 in rent every month needed 70 paper bills. 70! I had to take a shoulder carry bag because that won’t fit in a wallet. If there were 500 RMB bills that would be a much more manageable 14 bills. I think most Chinese people will quickly appreciate carrying less physical notes around.

  11. jim says:

    a 1,000.00 and a 500.00 note should be issue for china. discontinue the 1.00 note and below. that’s where most asian countries issuing right now. save a lot by issuing these two high bank notes.

  12. jim says:

    o.k. a 1,000.00 note with sun yat sen and a 500.00 note with deng xiaopeng. maintain the mao 100.00 bill. 50.00, 20.00, 10.00 and 5.00 reserve for others. discontinue the 1.00 bill and below. instead replacing lower denomination with coins.

  13. @TheNewTopical: My, aren’t we precocious?

    Several points:

    1. The desire for larger notes is coming from a member of the CPPCC, not the foreign commenters here. The fellow who made the proposal is undoubtedly having to move around large stacks of 100 RMB notes. The foreign fellows are agreeing because they also get paid in large stacks of 100 RMB notes–and plenty less than the political and commercial Chinese elite do. The CPPCC member is entirely right in noting the costs and inconveniences of dealing with a top-note that no longer reflects the normal amounts of such common transactions, much less the sheer amount of cash (versus credit) transactions taking place in China on a daily basis.

    2. Who really bothers to ‘distribute 100s around your person’ on a daily basis, or even on pay day? If you were actually in China and saw the stacks of cash some of these people are bringing in or out of the bank, you’d also quickly realize that distributing random 100s around your person isn’t a very effective method of trying to hide it. I suppose if you opened a hole in your coat and stuffed it full of wads of bright red, Mao-faced 100s, you might just end up looking like the hunchback of Notre Dame.

    3. Less likely to get robbed? As mentioned previously, it doesn’t matter whether you’re bringing home your wage in 100s or 500s: if it’s stolen, you lost the same amount of money, unless you really did squirrel money away in a hole in your coat. For people who only earn a couple thousand a month, the bank probably isn’t even going to issue 500s. These are more useful for larger transactions.

    4. The point of 500s (in terms of buying goods or services) comes into clearer focus if you happen to see a major transaction happen: buying medical services, an apartment, a car, a plane ticket. Credit still isn’t so widespread, and 500s would be quite useful, rather than lugging a stack of 100s.

    On a completely different matter, the Chinese posters on the original article don’t seem to understand economics at all. Inflation is not going to be caused simply by issuing a new note. Rather, issuing the new note might be a reasonable response to the inflation that is already occurring quite rapidly in China. Perhaps they have noticed the fact that a dish that cost them 5 yuan a couple years ago now costs them 10 or 20. Particularly goods and services that are consumed by the urban elite have risen in price, sometimes 5-fold or more… just over the past 4 years.

    That’s inflation, and it happens whether the currency keeps up to date with it, or not: witness places like Myanmar and Zimbabwe which have officially tried to ignore inflation by not issuing larger notes. Myanmar (I just visited last month) has highest value notes only worth about $1. Everyone carries stacks of money around to buy basic services. While it means that the loss of one note is less of a problem, the sheer inconvenience also makes loss/being cheated/theft more likely.

    Inflation happens regardless of what kind of money gets printed. More important is the overall value of money that gets printed, and the corresponding public confidence in that money. If the Chinese mint churns out 500s at the same rate it has had to churn out 100s, then we have a problem.

    Also of more concern: problems like the artificial devaluation of the yuan (the matter of eternal international griping), and lopsided local economies inflated by the sheer amount of money the Chinese elite and government in general can spend. Places like Shanghai price out the average Chinese just based on the wage disparity between it and other parts of China.

    So is there some irony in the idea of putting Deng Xiaopeng and his capitalist reforms on a 500 yuan bill when even today the common Chinese netizen doesn’t even understand the basics of economics?

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